Where Inequality Begins

Wealth inequality by racial and ethnic lines is vast – the median net worth of a White household was 13 times greater than that of a Black household in 2013, and 10 times greater than a Hispanic household, according to the Pew Research Center. For White households, median net worth was $141,900 that year, while it was $11,000 for Blacks and $13,700 for Hispanics.

Pew’s report offered a few theories as to why this may be the case, including the impact of the Great Recession on savings and homeownership rates among minority households. But new evidence shows that the roots of the wealth gap also lie in stark differences by race in wages and access to worker benefits.

A new report from the Center for Law and Social Policy (CLASP) finds that Black and Latino workers not only earn significantly less than workers do generally, they are much less likely to have access to paid family leave and sick days and more likely to experience unstable scheduling at work. The combination of these factors, argues the report, makes it that much harder for workers of color to move up the wage and job ladder.

CLASP’s report finds that about half of full-time workers of color made less than $15 per hour in 2013, compared to 39 percent of all full-time workers.

Moreover, half of Latino and 42% of Black working parents live below 200 percent of the federal poverty line, compared to 18 percent for White working parents. “Inequitable earnings keep working families in poverty,” write Zoe Ziliak Michel and Liz Ben-Ishai, the authors of the report.

The report also finds that working parents of color have disproportionately less access to paid family leave. Only 5 percent of the lowest quarter of wage earners, a demographic in which people of color are disproportionately represented, has this access.

Source: CLASP

These workers who are already struggling with insufficient incomes are often forced to risk losing it all just to care for a newborn or ailing family member. Blacks and Latinos don’t receive the same access to paid parental leave as Whites do – in 2012, half of Whites had access to at least partially paid parental leave, while only 43 percent of Blacks and 25 percent of Latinos did. “To take paid parental leave, which is used to care for new children, workers often cobble together various types of paid leave, such as sick days and vacation,” the report finds.

Workers of color also have less access to paid sick days because they are disproportionately represented in jobs that often don’t offer paid sick days, such as agricultural, food service, and personal care occupations. Fewer than half of Latino workers had access to paid sick days in 2014, compared to 64 percent of White workers and 62 percent of Black workers.

Workers of color are more likely to face scheduling instability. According to the report, 45% of early-career (ages 26-32) workers of color receive their schedules less than one week in advance, compared to 35% of White early-career workers. Latino workers, while only making up 13% of standard full-time workers, make up 30% of contingent workers – meaning those workers hold “precarious jobs that produce lower incomes, have less security and stability, and are typically accepted due to necessity,” according to the report.

Source: CLASP

A few states, however, are taking steps to improve the quality of jobs for low-wage workers, such as increasing the minimum wage.

California Gov. Jerry Brown and state legislators passed a law this month to raise the state minimum wage to $15 per hour by the end of 2022. In New York, the Gov. Andrew Cuomo also signed a law that day that includes a gradual minimum wage increase to $15 per hour, as well as a bill guaranteeing paid family leave for most jobs. The states are on track to become the first with a $15 minimum wage.

Source: CLASP

Source: CLASP

It’s a leap that some business groups and others say could be dangerous for the economy. However, Ben-Ishai of CLASP argues that higher wages leads to higher employee retention as well as more spending money for employees – both outcomes that benefit businesses and the economy as a whole. For example, a Economic Policy Institute report found that increasing the minimum wage to $7.25 over the course of 3 years created a $10.4 billion increase in household consumption.

Ben-Ishai also argues that states could be even more ambitious in the future. One solution she advocates is a social insurance system, where employees contribute to a fund that they can then draw from when they need to take leave. “It means [businesses] don’t have to bear the burden alone,” she said.

As a growing number of states take on the issue of job quality, by raising the minimum wage and expanding access to benefits, the enormous disparities between workers of color and others could ease over time – and ultimately have broader impacts on reducing inequality.

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